Filtered by Subscriptions: Latin America Economics Use setting Latin America Economics
Mauricio Macri will be sworn in as president of Argentina today against a backdrop of lofty expectations in financial markets for policy change. The lesson from other EMs is that big reforms tend to happen in the first 100 days of a new presidency. As …
10th December 2015
The bigger-than-expected drop in Mexican inflation in November underscores the lack of price pressures in the economy. Against this backdrop, although it will be a close call, we are sticking with our non-consensus view that the Mexican central bank will …
9th December 2015
The stronger-than-expected rise in Brazilian inflation, to a 12-year high of 10.5% y/y, was driven in large part by a jump in food inflation. While this pick-up should be temporary, given that it comes on the back of hawkish minutes from last month’s …
Venezuela’s electoral council has finally conceded that the opposition won a two-thirds supermajority in Sunday’s legislative elections and this is certainly a game changer. It will give the opposition power to change the constitution and could next year …
The various factors pushing up food inflation in Brazil should start to fade by Q2 2016 and, with the boost from this year’s regulated price hikes set to ease too, headline inflation is likely to begin declining around the same time. But before this …
8th December 2015
The further fall in Chilean inflation in November is an encouraging sign that price pressures in the economy are easing. While this reduces the likelihood of the central bank hiking interest rates later this month, inflation will remain high and a gradual …
7th December 2015
Venezuela’s opposition comfortably won yesterday’s legislative elections, although with 22 seats still to be declared, the size of the victory (and therefore the impact on policymaking) still hangs in the balance. A two-thirds super majority is still well …
Venezuela’s opposition looks set to triumph in legislative elections on Sunday but, unlike last month’s election upset in Argentina, this won’t trigger a shift towards more orthodox policymaking. If anything, we expect the country’s economic, political …
4th December 2015
As we anticipated, Brazilian markets have so far shrugged off last night’s news that impeachment proceedings will be launched against President Rousseff . As the dust settles, the biggest consequence of the political wrangling that will inevitably follow …
3rd December 2015
The 11.2% y/y fall in Brazilian industrial production in October was even worse than September’s 10.9% y/y decline, and adds to evidence that the economy’s deep recession continued at the start of Q4. Meanwhile, the minutes from last month’s COPOM …
The further fall in Brazil’s manufacturing PMI in November, to a fresh five-year low of 43.8, adds to evidence that the economy is yet to bottom out. The data are broadly consistent with industrial output continuing to contract by around 8% y/y in Q4. …
1st December 2015
Third quarter GDP data from Brazil made for grim reading, with the economy contracting by a larger-than-expected 1.7% q/q and falls earlier in the year revised higher. As a result, it seems likely that GDP will fall by something like 3.5% this year …
The election of Mauricio Macri , the reformist candidate in Argentina’s presidential election, has transformed the country’s economic outlook. The result was largely anticipated – markets had jumped ahead of the vote and the reaction to the result itself …
30th November 2015
Weaker Chilean activity data for October underscore the gradual nature of the economic recovery. Nonetheless, it too early to worry about a renewed slowdown in GDP growth in Q4. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
The smaller-than-expected 25bp hike in Colombia’s benchmark interest rate, to 5.50%, suggests that policymakers are starting to worry about the impact of tighter monetary policy on the economy. But, with inflation likely to continue rising over the coming …
Brazil’s financial markets have come under pressure in recent days following the escalation of corruption allegations at state-owned oil company Petrobras, but the bigger picture is that they have performed well in November as a whole. Markets elsewhere …
26th November 2015
We expect the economic downturn in Latin America to bottom out towards the turn of this year and conditions to improve in 2016. However, the recovery will be slow-going and uneven. For a start, the lagged effects of currency weakness will keep inflation …
25th November 2015
Weaker-than-expected Mexican inflation in the first half of November underscores the lack of price pressures in the economy. This reinforces our view that the central bank is likely to raise interest rates more gradually than markets expect, even as the …
24th November 2015
The election of pro-business candidate Mauricio Macri as Argentina’s new president is likely to herald a much-needed shift towards orthodox economic policymaking. In the near term, this is likely to be painful. Indeed, we expect the country to fall back …
23rd November 2015
Opinion polls are pointing to a narrow victory for pro-reform candidate Mauricio Macri in Sunday’s presidential election in Argentina and, if he prevails, the outlook for the economy would undoubtedly brighten. But it’s worth bearing in mind that the …
20th November 2015
The latest rise in Brazilian inflation, to a 12-year high of 10.3% y/y in the first half of this month, was due to a combination of a rise in food inflation, which appears to be due to a weaker real and a strong El Niño, and another increase in regulated …
19th November 2015
The acceleration in Chile’s GDP growth in the third quarter is an encouraging sign that, after a brief slowdown in the previous quarter, the economic recovery is back on track. GDP growth is still likely to be a lacklustre 2.2% over 2015 as a whole, but …
18th November 2015
The huge 6.2% y/y decline in Brazil’s Economic Activity Indicator in September was the steepest fall on record and, at face value, is consistent with a contraction in GDP of close to 5% y/y over Q3 as a whole. In seasonally-adjusted q/q terms, that means …
The pick-up in Peruvian economic activity in September suggests that the economy’s recovery is still on track. Nonetheless, the weakness of August’s data means that GDP growth was probably unchanged in Q3 from Q2. … Peru Economic Activity …
13th November 2015
The Central Reserve Bank of Peru’s decision to leave interest rates on hold at 3.50% came as no surprise and the accompanying statement suggests that policymakers feel little pressure to tighten monetary conditions. But we suspect that inflation will not …
The flurry of Q3 GDP data due over the coming weeks are likely to show that the downturn in Latin America’s economy has begun to bottom out. But this marks a wide divergence in performance at a country level. While growth in Mexico, Chile, Colombia and …
12th November 2015
The further pick-up in Mexican industrial production growth in September, to 1.7% y/y, suggests that the sector may finally be finding its feet. But overall, industry probably contributed only a meagre 0.4%-pts to annual GDP growth in Q3. … Mexico …
11th November 2015
October’s 2.5% y/y rise in Mexican consumer prices is unlikely to change the near-term monetary policy outlook given that it was in line with expectations and unchanged from September. Instead, with a US rate hike in December now back on the table after …
9th November 2015
October’s rise in Brazilian inflation, to 9.9% y/y, was due in part to a fresh increase in regulated fuel prices, but it looks like the recent slide in the real also played a role. Elsewhere in Latin America, inflation in Colombia rose further above …
6th November 2015
The sharp falls in currencies across Latin America over the past year have pushed up inflation in most countries. But the extent of the pass-through has varied significantly. The effect has been strongest in Colombia and Chile, while in Brazil and Peru …
5th November 2015
The 10.9% y/y fall in Brazilian industrial production in September, coming on the back of similarly steep falls in output July and August, means that the sector probably subtracted around 2.0%-pts from annual GDP growth over Q3 as a whole. … Brazil …
4th November 2015
The drop in Brazil’s manufacturing PMI in October, to a five-year low of 44.1, is an early (and ominous sign) that the country’s recession continued into Q4. Perhaps the one crumb of comfort in today’s data is that the weakness still appears be …
3rd November 2015
The Venezuelan government has continued to block the publication of almost all economic data, but our GDP Tracker suggests that output is now contracting by close to 10% y/y. This would mean that the economy is in the midst of its worst recession in over …
2nd November 2015
The decision by Colombia’s central bank to hike interest rates by more than expected was a move partly designed to clamp down on a recent surge in inflation but also to maintain its credibility in the markets. With inflation set to remain well above …
Activity data from Chile picked up in September despite a major earthquake hitting the country. Encouragingly our GDP Tracker suggests that GDP growth edged up over Q3 as a whole. … Chile Retail Sales, Ind. Prod. & Copper Prod. …
29th October 2015
The surprise outcome of the presidential election in Argentina has raised the prospect of a shift towards more market-friendly policymaking, following 12 years of populism under successive Kirchner governments. The markets have rallied on the news, with …
28th October 2015
Following a torrid Q3, Latin America’s financial markets have had a good start to Q4. Equities, bonds and currencies have all rallied so far this month. Looking ahead, it will be a bumpy ride over the next year or so, but the outlook for the region’s …
27th October 2015
The decision by Brazil’s central bank not to raise interest rates last week has sparked a debate over whether Latin America’s largest economy has succumbed to “fiscal dominance” – whereby fiscal considerations become the overriding driver of monetary …
The 2.6% y/y rise in Mexico’s IGAE Economic Activity Indicator in August was driven by a pick-up in growth in the agriculture and services sectors. More generally, the Activity Index for July and August points to stronger GDP growth in Q3 than in Q2. … …
26th October 2015
A much narrower-than-expected victory for Daniel Scioli in Argentina’s general election means that outgoing president Cristina Kirchner’s chosen successor will face a tricky second-round run-off on 22nd November against centre-right candidate Mauricio …
The 2.5% y/y rise in Mexican consumer prices in the first half of this month is unlikely to have much of a bearing on next Wednesday’s MPC meeting, given that it was in line with expectations. However, an appreciation of the peso and a scaling back of US …
22nd October 2015
Our latest Banking Heat Map shows that credit bubbles across Latin America have started to deflate. So far at least, this does not appear to have triggered widespread problems for the region’s financial system. While default rates are edging up, they …
News that Mexico’s flagship Volkswagen (VW) plant has cut weekend shifts, frozen hiring and scaled back production in the wake of the emissions scandal that has engulfed the company has raised concerns about the wider impact on Mexico’s economy. However, …
21st October 2015
The latest rise in inflation in Brazil, to a 12-year high of 9.8% y/y in the first half of this month, was driven by another increase in regulated fuel prices and was in line with expectations. It is therefore unlikely to have much bearing on the outcome …
The primary driver of the slump in Brazil’s economy over the past year has been a collapse in business investment. We expect this to ease towards the end of this year – with consumer spending taking over as the main source of economic weakness in 2016. … …
19th October 2015
Daniel Scioli, the candidate of Argentina’s left-wing ruling coalition, seems on course to win the presidential election in the first round on 25th October. His plans for the economy have been unimpressive but, as we explain in this Watch , Argentina is …
16th October 2015
The 4.5% y/y drop in Brazil’s Economic Activity Indicator in August suggests that the country’s recession probably deepened over Q3 as a whole. The monthly activity data suggest that this deterioration was broad-based. … Brazil Economic Activity Indicator …
Chile’s decision to raise interest rates last night is likely to be followed by another hike soon, but the bigger picture is that the tightening cycle is likely to be short. Meanwhile, although the Peruvian central bank left policy unchanged yesterday, we …
The weakening of Peru’s economy in August is disappointing, but we don’t think this is the start of a sustained downturn and the recovery remains on track. … Latin America Data …
15th October 2015
The modest 1.0% y/y rise in Mexican industrial production masked the more encouraging 3.1% y/y increase in manufacturing output. But the bigger picture is that the sector remains weak. … Mexico Industrial Production …
12th October 2015
